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Employers Accelerate Move To Value-Based Care In 2018

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The nation’s largest employers are moving quickly toward value-based approaches to contain health costs and improve quality, employers and health benefits firms say.

With the National Business Group on Health (NBGH) reporting that almost two in five – nearly 40% - of employers are incorporating some “type of value-based benefit design” into their workers' health plans next year, it’s clear the shift from fee-for-service medicine is no passing fad.

“Many employers are increasingly focused on how health care is delivered and paid for in addition to how it is structured,” says Ellen Kelsay, chief strategy officer for NBGH.  "Past efforts focused on plan design and health care management haven’t proven sufficient in driving down costs and improving quality."

In a value-based model, doctors and hospitals are paid to care for populations of patients making sure they get the right care, in the right place and at the right time. They are also measured on the quality of care they provide rather than the fee-for-service approach, which is based on the volume of care delivered no matter how it turns out for the patients.

For employers, the value-based approach also means employees can pay a lower co-pay or premium if they “take steps to manage chronic conditions or obtain higher-quality or more efficient care,” NBGH said in its newly released 2018 health care strategy and plan design survey.

Employers are also working with insurers who manage their benefits to contract with value-based entities like accountable care organizations (ACOs), which are proliferating across the country. NBGH said 21% of employers “plan to promote ACOs in 2018 but that number could double by 2020 as another 26% are considering offering them.”

“Employers are ramping up efforts to positively affect the supply side of the health care system by pursuing health care payment and delivery reform initiatives,” Kelsay says. “These activities are evident in the rising interest in accountable care organizations, centers of excellence, bundled payments and value based benefit design.”

ACOs put doctors, hospitals and a team of providers including social workers under the same umbrella to care for populations of patients. The ACO has a contract with Medicare, Medicaid, private insurers or employer-based plans to improve quality, lower costs and then keep any money saved from year to year based on the arrangement with the insurer.

Other reports have supported the NBGH report. An Aon Hewitt benefits survey earlier this year had 11% of large employers offering “value-based reimbursement networks in key locations” with nearly 50% adding them in three to five years. Half of employers are also implementing programs to guide their workers toward “centers of excellence” for certain procedures that are “pre-selected” by the company, Aon Hewitt’s report said.

Employer efforts are on a similar track being pursued by the government’s Medicare insurance for seniors.

Already, 50% of Medicare payments to doctors and hospitals are moving to alternative payment models by 2018 like ACOs, patient-centered medical homes and bundled fees to medical-care providers though the Donald Trump administration this week scaled back some. Insurers including Aetna, UnitedHealth Group and Cigna are telling Wall Street the Medicare Advantage plans they operate are on track or ahead of schedule in moving payments to alternative models.

“85% of all of our (Medicare Advantage) lives are in value-based programs,” Cigna CEO David Cordani told analysts earlier this month on the company’s second-quarter earnings call. “We have a high value-based penetration of our programs.”

 

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